Agricultural land in general sense means an area of land used for agrarian utilization particularly for growing crops, rearing livestock with a common objective of providing food to humans.

The United Nations Food and Agriculture Organization (FAO) claims agricultural land as the amalgamation of different types of lands which have been described hereinunder:

• This land is used for allowing replanting or fallow land within any five years period. Thus, this land is also called crop land.
• This land is used for producing crops not allowing replanting in a year.
• This sort of land includes the grasslands either naturally or artificially utilized for grazing livestock.

For instance – Land devoted for the use of cultivation of paddy, wheat, coffee, rubber could be termed as a cultivable land. Hence naturally it is an agricultural land.

Legally speaking, section 2(14)(ii) of Income Tax Act, 1961 defines agricultural land as:

Agricultural land in India, not being land situated:

IMPORTANCE OF AGRICULTURAL LAND

Agricultural land have great significance for growth of lives since time immemorial. It acts as a resource to feed and host other public benefits. Here is a descriptive account on why we should preserve it from it being further diminished.

1. It anchors the agricultural economy– Every share of farm or agricultural land depend upon each other for human endeavors thus, one farm diminishing negatively imparts the related farms and the whole economic transactions of society.

• For National Security – With the openings brought in global market, import-export of food products of farms have facilitated foreign exchanges in India. So, shortage in agricultural land will definitely affect demand-supply ratio and prices and consequently bring political upheavals where, food security and adequate nutrition can bring stability to some extent. Hence agricultural land plays an important role in sustaining national security.

• Creates Job – Agricultural land requires working of several persons on it involving managers, machinery operators, field workers, farmers, agriculturalists etc. Encouraging agricultural lands will facilitate more jobs in secondary sector for food processing, retail shops etc.

Apart from all these, encouraging establishment of agricultural lands aids in supporting our economy, keeps money in state, creates a self-sufficient state, enriches agricultural tourism, delivers goods and services to the ecosystem and most importantly boosts the sociological and economic standards of a country.

FINANCING PURCHASE OF AGRICULTURAL LAND

Considering all the factors mentioned in the above lines, it is crystal clear why we need more agricultural land in our state with a rapid growth of urbanization and lack of food security.

A new scheme to give a boost to agricultural credit was declared in India on 18^th June, 2004. Banks provide financial aid to farmers for development purposes and short-term loans for production purposes.

1. OBJECTIVES
2. To back up economically weaker and marginal holdings.
3. To inculcate fallow lands and waste lands as a part of agricultural process.
4. To enhance agricultural surplus.
5. To financially cooperate with the farmers to enhance their earnings.

• ELIGIBILTY – This scheme is open to the persons mentioned over here:
• Small and marginal farmers owing maximum of irrigated or non-irrigated land as stipulated by NABARD.
• Share croppers
• Tenant farmers

• MARGIN – There is no margin set for loans valuing Rs. 50,000. However, a margin of 10 % is added against the loans valuing more. But, a lower rate of margin enables small farmers to acquire higher quantum of loans.

• INTEREST-Interest rates on loans are fixed according to the RBI guidelines, revised timely.

• SECURITY -The agricultural land bought out of the loan amount provided by the bank will form the mortgage property or security to be rendered in the bank.

• FIXATION OF VALUE OF LAND – Value of the land must be ascertained to provide the financial assistance and determine its quantum. However, the evaluation shown by the farmers must be cross-examined with the valuation available with the Registrar of the jurisdiction and a due perception must be made by the bank.

• QUANTUM OF LOAN – The quantum of loan provided by the bank depends on the carpet area of the land to be purchased, its economic valuation along with the current development cost.

• PERIOD OF REPAYMENT – Moratorium period is determined on the basis of the gestation period and cash flow evaluation in the project and increase of this period shall help the small farmers towards repayment of loan. However, this period is fixed for 24 months with an aim of repayment of loan within 7-12 years in yearly or half yearly instalments.

• CAPACITY OF REPAYMENT – Naturally, a bank before providing loan satisfies itself that the borrower will earn enough profit from the agricultural land to repay the loan amount along with the interest. Such logical determination on part of the bank is necessary to fix the repayment period.

1. TERMS AND CONDITIONS– There are certain terms and conditions associated with provision of loan to the borrowers by the bank which are hereinunder specified:

• The financial bank should satisfy itself with the borrower’s credibility of repayment.
• Whenever land development includes construction of wells, bore-wells, supply of electricity must be made mandatorily significant.
• Whenever farmer go for irrigated lands, they should be encouraged for horticulture commercial plantations etc.
• The farmer is not permitted to sell off the land without repaying the loan amount or during the loan tenure.
• Banks should follow other safety standards, guidelines and norms set by the RBI and the government.

RELEVANT CASE LAWS

1. In M.S Srinivasa Naicker (vs) ITO, 292 ITR 0481 (Mad) (2007), the court held that in case of absence of any intention to use the purchased land for agricultural purposes on part of the purchaser, the seller assessee shall continue using the benefit of such land as he had been using for agricultural purposes.

• In Ranganatha Sastri (M) (vs) CIT, 119 ITR 488 (Mad) (1979), the court observed that an agricultural land having been used for agricultural operations shall continue being an agricultural land even if it temporarily suspends its agricultural functioning.

• In Radhasoami Satsang (vs) CIT, 193 ITR 321 (SC) (1992), CIT (vs) Satinder Pal Singh 188 Taxmann 54 (P&H) (2010), the court clearly stated the procedure involved in ascertaining the distance. Distance has to be calculated inculcating the approach road and not evaluating as a straight line.

CONCLUSION

Agriculture land is indeed a necessity in today’s growing urbanization where agrarian economy is pushed downwards for bringing less capital in hand. But it can never be ignored that agrarian functioning can only bring about nutritional value and primary economic gains providing a staircase for further socio-economic surplus. Hence, government, RBI and other financial bodies shall attempt in making policies to encourage developments of agricultural lands with the obvious determination of the executives working at ground levels to create a state with better standard of living and further holistic developments.

REFERENCES

1.INTERNET

• https://www.thehindu.com/features/homes-and-gardens/Land-laws-across-India/article14414630.ece
• https://www.taxmanagementindia.com/web/View_discussions_detail.asp?ID=1988
• https://taxguru.in/income-tax/agriculture-land-income-tax-confusing-clear.html
• https://data.oecd.org/agrland/agricultural-land.htm
• https://www.igi-global.com/dictionary/food-security-through-rational-land-management/75839

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